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Fortnightly Magazine - October 1 1999

Gas Capacity Rights. The New York PSC told retail suppliers that to serve firm retail gas load they must have rights to firm, non-recallable, primary delivery point pipeline capacity for the five winter months, November through March, or else must augment secondary capacity with a standby charge payable to local distribution companies holding primary rights.

Even the FERC's own lawyers urge a new rule when a customer leaves a utility that already has too little capacity.

In a brief filed Aug. 18, staff counsel Theresa Burns and Diane Schratwieser urged the Federal Energy Regulatory Commission to rethink its policy on wholesale stranded costs when a customer threatens to leave but the utility is so short of generating capacity that it can easily make up any lost revenues by reallocating the reserves to other native load customers at prevailing, regulated embedded-cost retail rates.

Bigger payoffs for larger electric customers should surprise no one, says one exec, while a consultant blames the Fortnightly for obscuring the point.

It is not surprising that authors Bierman, Nelson and Stover ("Anomalies in Residential Electric Rates: Harbinger of Competition?" Public Utilities Fortnightly, July 15, 1999) found an increasing differential between residential and industrial rates. It also is not surprising that there is a correlation with deregulation activities. This situation is the natural result of competition causing subsidies to unwind.

Energy-related carbon emissions in the United States remained relatively flat last year, despite 4 percent U.S. economic growth. Although one year's data does not a trend make, the federal statistics seem to fly in the face of the notion that strict emissions cuts threaten the economy by raising energy prices and unemployment. Instead, says technology strategist Mark P. Mills, the figures evince a decade-old shift toward an electricity-driven economy.

The great California debate - what role and structure for a power exchange? - once again is rearing its head, this time on the national scene. The resurgence of interest in regional transmission organizations, or RTOs, spurred by the recent Notice of Proposed Rulemaking[fn.1] issued in May by the Federal Energy Regulatory Commission, raises questions about the relationship between RTOs (designed primarily to manage grid operations) and power exchanges (seen as vehicles to facilitate trading).

Federal and state interests clash as the FERC battles California over the future of the state's power exchange.

The California Power Exchange will not outlive its four-year mandate because it cannot compete with lower-cost exchanges, such as the New York Mercantile Exchange, Automated Power Exchange and low-cost over-the-counter brokers. So says Edward Cazalet, chief executive officer at Automated Power Exchange and chief rival of the CalPX.

The annual Automated Meter Reading Symposium, Sept. 26-29 in Reno, Nev., finds AMR a year further along in its evolution in terms of both implementation and ideas for application and usage.

But while a few electric utilities have embraced AMR and others will arrive at the symposium ready to make purchases, some uncertainty remains for others as to the what, when and how of the technology.

AMR has come full circle - from industry darling to problem child and now back again to the next new thing. For this latest reincarnation, thank the Internet.

Early AMR efforts focused on how to recoup costs through lower operating expenses and more accurate usage data, but infrastructure startup costs proved a stumbling block to modernization when industry uncertainty over deregulation made companies wary of whether they'd ever see a return on their investment.

Consultant blasts national effort, says standards themselves are the problem.

Concerted efforts by utilities, retail marketers and metering companies to establish uniform business practices by implementing national electronic data interchange standards, or EDI, as part of retail competition, are being undermined by the EDI standard itself, says Doug Houseman, director at Cap Gemini Hagler Bailly.

"It is a very big, nasty, complicated monster. There are a lot of people that do not know what they are doing," he says.